Good thread I think that the answer depends on what it is you can personally live with. What is CRITICAL is your ability to handle risk mananagment and be able to stop/scratch any trades where you don't have confirmation from the other timeframes. I kind of picture the timeframes as successive gears in a system/machine, planets and other bodies in orbit, etcetera. At times, the 1 minute chart which is the smallest gear and thus turns the fastest and may be in the upwards (or downwards) cycle at different times than its larger timeframe charts and may give you the very short term picture of where prices are going (Scalping only and high risk). Other times it is leading where the other charts have yet to pick up on. This is where the trader has to be able to make the decision to go and be ready to pull back if the larger time frames do not confirm. Keep in mind the trends are best gleaned from the larger timeframe charts as they will screen out a lot of the noise which the smaller timeframe charts will show. Its all about what YOU feel YOU can do - INTERPRETATION - identifying support/resistance, divergences, and seeing an entry signal on 1 or more of the charts, EXECUTION - reading the signal and clicking the Buy or Sell button, and DISCIPLINE - risk management and profit maximization.
Hi TS, great topic, as you can see a ton of suggestions. There is an answer, which depends on how you are trading. Keep track of what each chart you are following says for every trade you take. At the end of each month, compile a table of the results. I don't know what you'll find, but what I find continually surprises me. An example: I always hear that the smaller time frame gives the signal first. However I have found some of the best trades come when the longer time frame disagrees with the smaller frame(s)-- I take the signal from the longer frame. Soon after entering, the smaller frames will change and match the longer time frame signal. This makes sense for my method (trading pullbacks). If there is a pullback in the longer frame, of course the shorter frames will be trending strongly opposite the direction of the trade. Since I know you trade the NQ, another thing you should try is looking at tick charts. They really help by expanding the busy times and compressing the doldrums. Compare the results you get to the timed charts. Since I tried it, I was amazed to find I get about 80% of the good signals from the tick charts and only about 20% from the timed. I now use 30, 90, 200, and 300 tick charts. I also found that they take turns making money. For instance, this week the 200 tick is my honey bear. During that chop last week it was the 90.
Not trying to be a smartarse, but Liquidity is a refuge from uncertainty (meaning cash is also a position). I would suggest you back off and just watch the markets whenever you get into a situation as you described. Get a feel for how the three timeframes interact with each other. As you begin to feel comfortable with what the market is offering you, start taking small positions and see how things play out. There is alot of excellent advice in this thread for you to follow. Pick what feels comfortable to you and go with it. Test it with micro positions so you don't hurt your trading account and your all important psychology. What doesn't work for you, throw out and try something else. But by all means spend time observing what happens while you are not in the market. Don't worry about missing opportunities while you observe market action. The education will pay for itself many times over once you have mastered this conflict you are experiencing. It will also save you money!
I don't like a 1 min....but I think a 2min chart is twice as good[g] Here's something you can try on your 3min, 5min charts. It's the 3, -3 MA , a 3ma setback 3 bars. When it crosses the bollinger band or the price that's a signal. http://share.esignal.com/groupcontents.jsp?folder=Other Indicators&picture=0820ge.png&groupid=225 Just another way to use a moving average. ~j
Wow, Could this be this grail thing I hear people are looking for ...lol Very impressed with this...Can't wait until morning to watch it real time.... Have you used this in real trading.... Thanks Nick
Praise the Lord! BTW, I set my Bollingers std dev 1.62 not 2 You can go even tighter or multiple BB's? I know lot's of grail tricks[g]